Consumers are more confident in housing

Despite the high house prices, the share of consumers who think it is a good time to buy has increased to 20%. Those who think it's a good time to sell dropped to 64%.

WASHINGTON – The Fannie Mae Home Purchase Index (HPSI) rose 0.7 points to 74.6 in October, pushing the consumer confidence index to its highest level since February 2022 and well above the all-time low set two years ago.

In October, the share of consumers who think it's a good time to buy a house rose to 20%, while the proportion of consumers who think it's a good time to sell a house dropped to 64%. Online, consumers continue to expect home prices to rise and mortgage rates to fall, with the latter component hitting another record high in this month's survey. Personal finance components also remained fairly constant month over month, with fewer consumers expressing concern about job loss and slightly more indicating that their household income has decreased year over year. The full index rose by 9.7 points from year to year.

"While we have seen a significant improvement in the general sentiment in housing in the last two years, the perception of consumers regarding the terms of purchasing houses remains tense, with only 20% believing that it is a 'good time' to buy a house, mainly due to the high house prices." said Mark Palim, Fannie Mae's senior vice president and chief economist.

“In fact, the stock that cites mortgage rates as the main cause of their home buying pessimism fell again this month; However, since the survey was conducted mainly in the first half of October, mortgage rates have risen sharply, which may dampen some of the rate optimism seen recently. Renting instead of buying is the next move for consumers With rent growth expected to remain modest in 2025, more consumers may seek and find attractive deals in the rental market as they continue to save for a future home purchase.

Emphasis on the components of the home purchase index

Fannie Mae's Home Purchase Index (HPSI) rose 0.7 points in October to 74.6. The HPSI increases by 9.7 points compared to the same period last year.

Good/bad time to buy: The percentage of respondents who say it's a good time to buy a home rose this month by one percentage point to 20%, while the percentage who say it's a bad time to buy fell from 81% to 80%. As a result, the net share of those who say it's a good time to buy rose 2 percentage points month-over-month to 60%.

Good/bad time to sell: The percentage of respondents who say it's a good time to sell a home (64%) decreased this month by one percentage point, while the percentage who said it's a bad time to sell (35%) remained unchanged. month over month. As a result, the net share of those who say it's a good time to sell fell 29 percentage point month-over-month to XNUMX%.

Expectations for house prices: The percentage of respondents who say that house prices will increase in the next 12 months remains unchanged at 39%, and the percentage who say that house prices will decrease also remains stable at 23%. The shares that think house prices will remain the same rose by one percentage point to 38%. As a result, the net share of those who say house prices will rise in the next 12 months rose one percentage point month-on-month to 17%.

Expectations for mortgage interest: The percentage of respondents who say that the mortgage interest rate will decrease in the next 12 months decreased from 42% to 39%. The percentage expecting an increase in the mortgage interest also dropped from 27% to 22%, a new survey. The part that thinks that mortgage interest rates will remain the same increased from 31% to 38%. As a result, the net share of those who say mortgage rates will fall over the next 12 months rose one percentage point month-over-month to 16%, the third highest in a row and the highest in the survey's history.

Worry about job losses: The percentage of employed respondents who say they are not worried about losing their job in the next 12 months rose from 77% to 79%, while the percentage who say they are worried fell by 2 percentage points to 20%. As a result, the net share of those who say they are not worried about losing their jobs rose 2 percentage points month-over-month to 58%.

Household income: The percentage of respondents who say that their household income is significantly higher than 12 months ago remains unchanged, on a rounded basis, at 18%, while the percentage who say that their household income is significantly lower also remains unchanged, on a rounded basis. by 11%. The percentage who say that their household income is about the same remains unchanged at 70%. The net share of those who say their household income is significantly higher than it was 12 months ago decreased by 2 percentage points month over month to 6%.

on Fannie Mae's home buying sentiment index

The Home Purchase Index (HPSI) distills information on consumer home purchase sentiment from the Fannie Mae National Housing Survey (NHS) into a single number. The HPSI reflects consumers' current views and forward-looking expectations about housing market conditions and complements existing data sources to inform housing-related analysis and decision-making. The HPSI is made up of answers to six NHS questions that ask for consumers' assessments of housing market conditions and address issues related to their home buying decisions. The questions ask consumers whether they think it is a good or bad time to buy or sell a home, in which direction they expect house prices and mortgage interest rates to move, how worried they are about losing their jobs and whether their incomes. higher or lower than they were a year earlier.